GIC-led consortium invests $500m in Vietnamese conglomerate Vingroup

Singapore’s sovereign wealth fund GIC has led a consortium to invest $500 million in the retail business of Vietnamese behemoth Vingroup, according to an announcement.

The consortium has acquired a minority stake in VCM Services and Trading Development Joint Stock Company, a unit of Vingroup that was recently established to oversee its operations of supermarket and convenient store chains.

Following the transaction, Vingroup will continue to be the controlling shareholder of VCM, GIC said in a statement. “As a long-term investor, GIC is confident in the growth outlook for disposable incomes and household consumption in Vietnam,” it added.

Last month, Vingroup split VinCommerce, the former entity that ran its retail business, into P&S Trade and Investment JSC and Adayroi Commerce and Service Development JSC. Adayroi is Vingroup’s e-commerce venture. In conjunction with the split, Vingroup also set up VCM to indirectly hold shares in VinCommerce.

According to business registration documents, Vingroup owns 64.3 per cent in VCM, while another 14.57 per cent is owned by two individuals.

As a result of the restructuring, VCM is currently the parent firm of Vinmart and Vinmart+ retail stores.

Vingroup had as many as 114 VinMart supermarket outlets and another 1,990 stores of the minimart concept, Vinmart+, as of 31 July 2019, according to its brochure. The $17.4-billion Vietnamese company has grown its retail chains both organically and inorganically.

Prior to the current investment, GIC pumped in $853 million in VinHomes in 2018, as part of the property developer’s IPO transaction.

GIC has been increasingly evincing interest in Vietnam. It has so far made investments in companies such as Masan Group, Vietjet, Vinamilk, FPT and PAN Group.

Meanwhile, Vingroup said it has raised a total of $6.9 billion through 15 transactions since 2013, including both equity investments and loans.

It banked a whopping $1 billion from South Korea’s SK Group, selling only a 6 per cent stake. Before that, Hanwha Asset Management invested $400 million in Vingroup’s convertible preference shares, while Warburg Pincus pumped in $300 million in its mall operator Vincom Retail.

The Vietnamese business giant recorded 61.3 trillion dong ($2.64 billion) in revenue in 1H2019, which matched the volume of the same period last year, but its net profit reached 3.35 trillion dong, up nearly 90 per cent.

Originally a real estate firm, Vingroup has expanded into various businesses such as retail, education, entertainment to automobile and technology.

Its recent activities include launching Vingroup Ventures, a $100-million venture capital arm, and partnering with Japan’s Fujitsu and American telecom major Qualcomm to produce 5G smartphones.